TEC (Theory) Seminar: Michael Grubb, Boston College

Speaker

Michael Grubb, Boston College

Title

"The Illusion of Competition" 

Abstract

Firms often sell similar products under multiple brand names, creating an illusion of competition when consumers mistakenly believe brands are independently owned. This misperception can lead consumers to search suboptimally—failing to consider alternatives from competitors or stopping their search prematurely—thus more likely to become captive to a single firm’s offerings. Consequently, policies that dispel this illusion, such as requiring transparency about brand ownership, may foster price competition and lower prices. Likewise, mandating brand consolidation during mergers can intensify competition and benefit consumers. In some cases, however, such policies may be counterproductive.

Companion paper can be found here